Equity crowdfunding has helped raise a staggering $2.5 billion USD for businesses worldwide, and the industry is set to triple in size by 2025! Though it’s a fairly new form of funding, it’s already a well-established one with plenty of potential, having helped the likes of BrewDog, Revolut, and The Very Good Food Company. Here we take a quick run-through of what it is, and whether it’s a good fit for your business. 

equity crowdfunding canada

What is equity crowdfunding?

Equity crowdfunding is designed to provide startups and early-stage businesses with an alternative source of funding to help capitalise on their growth potential. The business raising funds does so in return for equity or shares from “the crowd”, be it retail investors, accredited investors, or a mixture of the two. It can be used as an alternative, or in addition to, angel funding, venture capital, grants, or debt financing.

It’s quite different from rewards-based crowdfunding, offered by platforms like Indiegogo and Kickstarter, a type of small-business financing designed to help aspiring entrepreneurs turn a concept or idea into a profitable product or service. Equity crowdfunding, in contrast, is for any business with an established product-market fit, a defined audience, and a strong growth trajectory that is looking to accelerate progress and take things to the next level.

Though the industry is barely 15 years old it’s already well-established in the UK thanks to platforms like CrowdCube and Seedrs, and growing fast across North America too. The first known equity crowdfunding platform was launched in Australia, back in 2007, going by the catchy moniker of the “Australian Small Scale Offerings Board” (ASSOB for short). Here in Canada FrontFundr is the leading platform, having already helped over 60 companies raise more than $60 million.

equity crowdfunding

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Who is it for?

Equity crowdfunding is used by startups and growth businesses from all sorts of sectors and industries, be it breweries to banking, tech to tourism, or anything in-between. What ties them all together is the need for capital to accelerate growth, and the backing of a strong community that believes in the business, its mission, and future success. Investors are driven by both a financial incentive in the long-term, but also the chance to support a business that aligns with their core values and beliefs.    

Is equity crowdfunding right for your business? 

There are three main things you need to consider before jumping in and kicking off your own campaign:

  • How complex is your business model? What you’re offering needs to be clear, transparent and easy to understand. It needs to be something the general public can relate to, and might also find exciting, as that’s who you’ll need to convince!
  • How loud is your crowd? Whether it’s friends, family, business contacts or your customers, you need to make sure you have a strong network of supporters, people who already know your business and believe in what you do. This is the first place to look for potential investments, and is also the essential foundation of any successful campaign.  
  • How much time do you have? As all founders know, fundraising is a full-time job and equity crowdfunding is no different. To launch, run and successfully complete a campaign you’ll need at least one person on your team giving this their all (in other words working full-time on your campaign). Any less than that and you risk not even getting off the ground.
equity crowdfunding guide

Additional info and resources

If you’ve answered yes, yes, and yes to those three questions, and are keen to learn more about launching your own campaign, you can contact the FrontFundr team, who are on hand and available to discuss any further questions you might have. 

There are also a wealth of other resources available on their website, covering the crowdfunding process, due diligence, and a comprehensive FAQ section too. 

This post was contributed by our friends at FrontFundr

FrontFundr is Canada’s leading platform for equity crowdfunding, matching investors and up-and-coming companies through matchless technology and unrivaled transparency.

Chat to our team about your funding strategy - we can help.

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